"You Can't Lose on Stocks" - Jeremy Siegel

The following chart shows the year over year change in inflation adjusted retail sales per retail trade employee (excluding nonstore retailers). I've used semiannual data to smooth out the trends.


Click to enlarge.

Should the value on the chart drop to zero (we're just barely above it now), retailers will no longer need to hire new workers. Any value below zero means retailers will need to start letting workers go. They will probably be slow to do it at first on the hopes of a rebound. Good luck on that. In any event, a recession probably wouldn't start to hit until they figure it out.

August 6, 2013
Siegel: Keep buying—you 'can’t lose'

"The market is totally spooked by whether QE continues or not," Siegel said, but the Fed "would never accelerate tapering unless the economy was so much stronger, which has got to be good for earnings. So in one way, you can't lose on stocks—either the economy's weak, the tapering will end; or the economy's strong, they'll taper, and earnings will be strong. That's why I think stocks are still a win-win situation."

Professor Siegel, you never cease to amaze me. Stocks are up 160% from the bottom in 2009. Can't lose on stocks? What hubris! No wonder Robert Shiller thinks the stock market bubble is back.

It is my opinion that the market is "totally spooked" because the retail trade data comes out tomorrow and this ballgame is in its 13th inning (still tied ZIRP to ZIRP). As seen in the chart above, the downward trend in growth is even more horrendous (steeper slope) than it was heading into the Great Recession. I see it. Supercomputers using advanced trading algorithms at investment banks no doubt see it too. Meanwhile, Siegel's taking his cues from Ben "There Is No Housing Bubble to Go Bust" Bernanke? Swing for the fences! Can't lose! Forehead. Desk. Whack. Whack. Whack.

That's not to say that the retail trade data will be awful of course. I'm just saying that the trend looks awful and I have no great desire to bet against that trend.

You may be wondering why I excluded nonstore retailers from the chart. They don't create jobs; they automate them. I'm more concerned about the 14.6 million jobs that are left. JC Penney employees are too no doubt. I can tell you first hand what lousy morale can do to a struggling company.

Once again, just opinions! I cannot accurately predict the future. Nobody can. At best, all I can do is offer a somewhat educated guess. This is definitely not investment advice. Alan Greenspan had some good advice back in 1966 though. It did not include "can't lose" in it. That's for sure.

"There is no safe store of value." - Alan Greenspan (1966)

See Also:
Trend Line Disclaimer

Source Data:
St. Louis Fed: Custom Chart